Post on 18-Dec-2015
Tony SilitongaTony SilitongaIndonesian Institute for Corporate Directorship (IICD)Indonesian Institute for Corporate Directorship (IICD)
Tony Silitonga - 2006Tony Silitonga - 2006
Ten Boardroom ChallengesTen Boardroom Challenges
1. Board Mandate2. Management Oversight – Selecting, Supervising, Evaluating,
Compensating, and Replacing Management3. Corporate Strategy & Risk – Challenging management assumptions
about opportunities & Risks; consensus about strategic direction; monitoring achievement or strategic goals
4. Disclosure – Overseeing audit processes, accounting policies and disclosure requirements
5. Corporate Values – Establishing an appropriate “tone at the top”.6. An Effective Governance System – Developing and implementing a
governance system that makes efficient and effective use of limited resources.
7. Independent-Minded Board – Ensuring board objectivity.8. Fiduciary Governance – Understanding and meeting the expectations of
shareholders and regulators.9. Informing the Board – Identifying the board’s information needs and
ensuring the board has access to that information.10. Responding to Crises – Responding quickly and responsibly to
corporate problems.
Tony Silitonga - 2006Tony Silitonga - 2006
Half of the Fortune 500 companies in 1987 are not Fortune 500 companies today. Many of these companies have FAILED AND CLOSED THEIR DOORS FOREVER. Reasons cited are numerous (“Failures of Vision”, “Identity Crisis”, “Anybody Out There”, “The Glue Sticks, and Sticks”, “Enemies Within”).
Escalating challenge of CEO survival (Within 2 years, 57% of the largest 367 companies in USA REMOVED their CEOs )
There are CHANGES in nature of the business, investment, and investors (3 most obvious ones: Constituent Demands are Greater, Expectations are Higher, Competition is Tougher)
To influence the Boardroom guidelines and Best Practices that build on OECD Principles
Tony Silitonga - 2006Tony Silitonga - 2006
NOT AVAILABLE / NOT CLEAR
OperationalExcellence
Tony Silitonga - 2006Tony Silitonga - 2006
NATURALRESOURCES
TECHNOLOGY
LEGALPOLITICAL
ECONOMIC
SOCIAL
NEW ENTRANTS
SUBSTITUTE
SUPPLIER RIVALRYBUYER
Tony Silitonga - 2006Tony Silitonga - 2006
Tony Silitonga - 2006Tony Silitonga - 2006
McKINSEY’S INTERNATIONAL INSTITUTIONAL INVESTORS’ SURVEY CONFIRMS McKINSEY’S INTERNATIONAL INSTITUTIONAL INVESTORS’ SURVEY CONFIRMS IMPORTANCE OF GOOD CORPORATE GOVERNANCE IN INDONESIAIMPORTANCE OF GOOD CORPORATE GOVERNANCE IN INDONESIA
Source:McKinsey survey of 250 institutional investors with aggregate assets under management of USD3.2 trillion
• “In evaluating Asian companies for potential investment, how important is the quality of board practices relative to financial issues?”
Tony Silitonga - 2006Tony Silitonga - 2006
Tob
in’s
Q
Corporate Governance Scorecard
67.37
1.00 49.18%
High
Low
Low High
36.07%
Low Commitment
High Commitmen
t
Low Commitment/
Over Performers
High Commitment/
Under Performers13.11%
1.64%
Tobin’s Q: Lowest = 0.73; Highest = 7.25 CG Score: Lowest = 52.04; Highest = 82.83
Expected
Distributio
n
Tony Silitonga - 2006Tony Silitonga - 2006
67.37
1.00
Tobin
’s Q
High
Low
Low High
Tony Silitonga - 2006Tony Silitonga - 2006
Tony Silitonga - 2006Tony Silitonga - 2006
TRUTHSTRUTHS about about FRAUDFRAUD
• Fraud is recognised as a significant threat facing businesses, big or small, all over the world.
• Some frauds arise because of too much trust being placed on one individual with no effective segregation of duties.
• Employees can commit fraud at any time and for whatever reason.
ACRONYM FOR FRAUD : F ALSER EALITIESA PPEARINGU NDERD ECEPTION
Tan Chen Leong CFEIICD-Marcus Evans Forum for Directors16-17 Jan. 2006 – Mulia Hotel, Jakarta
Tony Silitonga - 2006Tony Silitonga - 2006
FRAUD RISK ???FRAUD RISK ???
Losses from fraud are likely to be grossly misleading because only a fraction of fraud is reported. Statistically:
• One out of every four persons will steal whenever they can.
• Two out of four persons will steal when they think they can get away with it.
• In total, 75% of all persons are potential fraud perpetrators.
Tan Chen Leong CFEIICD-Marcus Evans Forum for Directors16-17 Jan. 2006 – Mulia Hotel, Jakarta
Tony Silitonga - 2006Tony Silitonga - 2006
To face the challenges ? Board needs
the right people, the right culture, the right issues, the right information, the right process and the right follow-through
Tony Silitonga - 2006Tony Silitonga - 2006
ForForThe Board to Consider !!!The Board to Consider !!!
Tony Silitonga - 2006Tony Silitonga - 2006
Ten Boardroom ChallengesTen Boardroom Challenges
1. An Effective Governance System – Developing and implementing a governance system that makes efficient and effective use of limited resources.
2. Board Mandate3. Corporate Values – Establishing an appropriate “tone at the top”.4. Corporate Strategy & Risk – Challenging management assumptions
about opportunities & Risks; consensus about strategic direction; monitoring achievement or strategic goals
5. Disclosure – Overseeing audit processes, accounting policies and disclosure requirements
6. Fiduciary Governance – Understanding and meeting the expectations of shareholders and regulators.
7. mAnagement Oversight – Selecting, Supervising, Evaluating, Compensating, and Replacing Management
8. Independent-Minded Board – Ensuring board objectivity.9. Informing the Board – Identifying the board’s information needs and
ensuring the board has access to that information.10. Responding to Crises – Responding quickly and responsibly to
corporate problems.
Tony Silitonga - 2006Tony Silitonga - 2006
Ten Boardroom ChallengesTen Boardroom Challenges
1. Implementation2. Time Concern (2 X)?3. Interdependent but Accountable4. Advanced Training5. Maximum Board Seat6. Insurance